Correlation Between Hyundai Steel and SAMRYOONG CoLtd
Can any of the company-specific risk be diversified away by investing in both Hyundai Steel and SAMRYOONG CoLtd at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hyundai Steel and SAMRYOONG CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Steel and SAMRYOONG CoLtd, you can compare the effects of market volatilities on Hyundai Steel and SAMRYOONG CoLtd and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hyundai Steel with a short position of SAMRYOONG CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Steel and SAMRYOONG CoLtd.
Diversification Opportunities for Hyundai Steel and SAMRYOONG CoLtd
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hyundai and SAMRYOONG is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Steel and SAMRYOONG CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMRYOONG CoLtd and Hyundai Steel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hyundai Steel are associated (or correlated) with SAMRYOONG CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMRYOONG CoLtd has no effect on the direction of Hyundai Steel i.e., Hyundai Steel and SAMRYOONG CoLtd go up and down completely randomly.
Pair Corralation between Hyundai Steel and SAMRYOONG CoLtd
Assuming the 90 days trading horizon Hyundai Steel is expected to under-perform the SAMRYOONG CoLtd. In addition to that, Hyundai Steel is 1.49 times more volatile than SAMRYOONG CoLtd. It trades about -0.4 of its total potential returns per unit of risk. SAMRYOONG CoLtd is currently generating about -0.31 per unit of volatility. If you would invest 397,500 in SAMRYOONG CoLtd on August 29, 2024 and sell it today you would lose (36,500) from holding SAMRYOONG CoLtd or give up 9.18% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Hyundai Steel vs. SAMRYOONG CoLtd
Performance |
Timeline |
Hyundai Steel |
SAMRYOONG CoLtd |
Hyundai Steel and SAMRYOONG CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hyundai Steel and SAMRYOONG CoLtd
The main advantage of trading using opposite Hyundai Steel and SAMRYOONG CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Steel position performs unexpectedly, SAMRYOONG CoLtd can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SAMRYOONG CoLtd will offset losses from the drop in SAMRYOONG CoLtd's long position.Hyundai Steel vs. LG Chemicals | Hyundai Steel vs. Lotte Chemical Corp | Hyundai Steel vs. Seah Steel Corp |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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